The cost of loans over £5,000 peaked in May this year and has fallen since then, so if you do need to borrow a lump sum for an important purchase, now's a good time to do it.
Tesco this week lowered the rates on its
personal loans, making it the market-leader for anyone wishing to borrow between £7,500 and £14,999.
We take a look at how the offer stacks up...
What's the deal?
Tesco has introduced a low-cost loan charging a typical APR of just 7.7% if you are borrowing from £7,500 up to £14,999. So, for example, if you wanted to borrow £7,500 at this rate over 36 months, monthly repayments would cost £233.20, making the total payable £8,395.20.
If you wanted to borrow the maximum £14,999 at this rate over a 60-month period, monthly payments would cost £299.73, and you would repay a total of £17,983.80. Interest is calculated on a daily basis.
The loan has no set up charges and offers fixed monthly payments, providing security that you know exactly what you will be paying and making it easier to budget effectively.
Another advantage is that you can choose how long you want to take to repay the loan, with terms available from 12 months to 120 months. Remember that the longer you take to clear the debt, the greater the amount of interest you will pay.
Payments are made by monthly direct debit from the account the loan is paid into and your first payment will be made one month after the loan is issued.
However, you can defer your payments by two months right at the beginning of the loan. If you choose to do this, you will start paying back the loan the third month after you have taken it out.
Any catches?
As with all competitive loan and credit card deals, the best rates are only offered to those who have impeccable credit records.
The actual interest rate you'll pay on this loan is based on your personal circumstances, the time period over which the loan is repaid and the amount you choose to borrow. That means if your credit history is less than perfect, you're likely to be offered a much higher rate of interest.
This deal is also a limited offer and will be withdrawn from sale on November 10, so you'll need to apply before this date to qualify.
If you want to pay off the loan early, you can do this, but you will be charged up to two months interest.
Verdict
If you are looking to borrow money for a major purchase such as a car or home improvements, then this looks like a great deal. It's currently the market-leader for anyone wanting to borrow between £7,500 and £14,999.
Nationwide Building Society also offers a rate of 7.7% APR on loans between £7,500 and £14,999, but currently only holders of its FlexAccount who use this account as their main current account are eligible for this rate. From September 7, new FlexAccount customers and existing customers who have not used their FlexAccount as their main current account will be eligible to apply for this rate provided they transfer their main current account to Nationwide.
You don't have to open any other account with Tesco to be eligible for its 7.7% loan. Don't hang around though, as remember the offer disappears in November.
Apply for the Tesco Personal Loan - 7.7%.
Top tip
You need an annual income of at least £10,000 to apply for this loan and you must be a UK resident aged between 18 and 74.
Make sure you will be able to afford the repayments every month as this deal does not allow you to take a payment break at any time, and you will be charged £30 each time a loan payment is not made on time.
Bear in mind that missing a loan repayment could have a serious impact on your credit score and is likely to make it more difficult for you to take out a credit card or get a mortgage later on.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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